Strategies for broadcasters

Last week I appeared on TVO’s The Agenda with Steve Paiken, to discuss “Trouble in TV Land” with three industry reps. I tried at several points to pull the discussion away from the never-ending family quarrels between the broadcasters, independent producers and cable guys. These days it’s all about fee for carriage. Whatever the details, the whole industry is constantly embroiled in yesterday’s issues – while the opportunities offered by digital media are passing them by.

Conventional media operators are in deep financial trouble this year. Veronis Suhler Stevenson estimated in February that broadcast TV revenues will shrink by 9% in 2009 – not as bad as newspapers but no reason for optimism (these are US numbers, but the overall trends hold for Canada). Pure-play Internet and mobile are headed in the opposite direction – despite softening ad revenues in digital media as well.

The battle with cable over fees for carriage is now making it even harder for broadcasters to figure out what their new business models will look like. This in turn adds to the deep suspicion in which many broadcasters hold digital platforms, especially the Web. At the CRTC’s new media hearings, there was much talk about how the Web “cannibalizes” viewers and revenue that would otherwise accrue from TV ads. Until recently, Web sites for most broadcasters existed mainly to move visitors back to where they belong – in front of the TV.

“Promiscuity is the new exclusivity. Get your content everywhere.”

Wish I’d said it, but it was Arianna Huffington in one of her particularly witty moments (as reported by the San Diego News Network). The advice means a) get out of the habit of making your content “special,” as in exclusive, because that just makes it harder for audiences to find it; and b) don’t treat the new platform in town – the Web – as a threat or replacement, but as another way to reach the audience as part of a multi-platform strategy. For content providers, there’s only one way to win the long-term digital game: let go, open up, be inclusive. Otherwise, Canadian broadcasters in particular are in danger of reliving the disaster the music industry has been through.

In fact, there’s a lot to be learned from looking at how the music business has evolved over the last decade. Music has been the canary in the digital coal mine for TV and video. With the outcome of the new media hearing hanging in the balance, here are some ideas that deserve consideration by Canada’s conventional broadcasters:

The audience rules. Broadcasting is a push medium; the Web is a pull medium. “New media broadcasting” is an oxymoron. Stop fighting over cable tiers and fees for carriage, and start worrying about whether your audience is engaged. Yes, this has become a platitude. But learning how to interact with end-users while letting them set the rules of engagement takes planning, practice and patience.

DRM doesn’t work. To the networks and studios, digital rights management has long been a sacrament – like regional coding for DVDs. There’s no empirical way of knowing what the cost-benefit analysis would look like. But there is a reason DRM has now been lifted from all that music on the iTunes Store. If Steve Jobs was able to figure out how to make a business of selling music online in the first place, and his store is now the world’s largest digital music retailer, he must be doing something right.

Online, loyalty is everything. Another platitude worth keeping in mind. In a world with over 200 million Web sites, at least 70 million of which are active, you can’t make your audience stick around, any more than you can make them like your content. And you don’t make your content attractive by making it inaccessible. Loss leaders have worked since the dawn of groceries. As Mike Masnick over at the Techdirt blog is fond of pointing out, making some of your content free – and therefore freely accessible – doesn’t mean you stop making money.

The largest online repository of Canadian content is… the iTunes Store. Or so I said the other night to Steve Paiken. I may be wrong, but I’m not aware of any other Web destination with such an extensive collection of Canadian music, music videos, podcasts, TV shows and the like. The Canadian iTunes store has pulled off something remarkable. It offers all that content without being either regulated or subsidized. The fact that it’s entirely owned and controlled by Apple, Inc. doesn’t change its most important attribute: it operates in response to consumer demand. Does that mean we throw up our hands and let Apple call the shots? Of course not. I just hope Ottawa’s deciders and Canada’s broadcasters will appreciate that in digital media, you can’t subsidize content on the basis of a supply-side strategy – and keep hoping that if you build it, they will come.

One thought on “Strategies for broadcasters

  1. The major issue here is the “audience rules,” yet broadcasters don’t seem to be considering the audience as they move to the Net. We’ve seen huge changes in the way audiences operate since digital media, primarily the Web, have become household fixtures. Audiences have fragmented and retreated further into their own “infotainment” spaces, with endless choice in terms of information and content. Anybody looking to move content to the Web, especially broadcasters, needs to focus on viable ways to capture (pull) audiences, and get audiences and advertisers working together to make the medium commercially viable.

    Meanwhile, YouTube and similar sites are creating serious issues for everyone, including themselves.

    YouTube’s problem is there was no way it could have been successful in its early stages without being free. Now the video behemoth is part of a rapidly evolving Internet where high quality means supporting huge costs for building and maintaining massive storage and transport facilities all over the world – facilities with power requirements and carbon footprints on the scale of small cities. Revenue has to be found to fund this infrastructure. But most advertisers are still loath to associate themselves with what they consider to be amateurish content, which could do harm to their brand equity.

    Compare the YouTube predicament to Apple’s brilliant online concept, the iTunes store. Although it now has lots of free content, iTunes is a “store,” a controlled environment where customers have always expected to pay for what they consume. A more relevant online example might be Joost, since its revenue model is based on advertising, not direct purchase. Joost may not be perfect but it does a good job of combining short, relevant and well executed advertising spots with a wide range of quality content.

    Some broadcasters are rising to the challenge. CNN for example seems to understand the concept of multi-platform delivery and how to make watching the news on a laptop a compelling experience. But the real key to success for broadcasters lies in working with their audiences and the content their audiences create. This is a completely alien idea to most broadcasters, who are used to the decades-old one-way relationship. And old habits die hard.

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